Mortgage lending rose at its slowest rate for more than a decade during November as the number of loans approved for house purchase also slumped to a 20-month low, figures showed.
Net lending, which strips out redemptions and repayments, was just £1.46 billion during the month, half the level seen in November last year and the lowest figure since August 1999, according to the British Bankers’ Association.
The subdued lending market also showed little sign of picking up in the near future, with the number of mortgages approved for house purchase dropping to a 20-month low of 29,991.
The figures are in line with those reported by the Council of Mortgage Lenders earlier this month, which showed that total mortgage advances had sunk to their lowest level for November since 2000.
The data are bad news for the housing market, as they suggest the current subdued levels of activity are likely to continue into the new year, putting further downward pressure on prices.
Howard Archer, chief UK and European economist at IHS Global Insight, said: “The BBA data point to the housing market ending 2010 very much on the back foot, where we expect it will remain for much of 2011.
“Housing market activity remains stuck in the doldrums, which seems highly likely to maintain downward pressure on prices. The BBA data showing mortgage approvals softening further to a 20-month low in November reinforces our belief that house prices will trend down gradually to lose around 10% from their peak 2010 levels by the end of 2011.”
But on a brighter note, the BBA figures showed a further rise in the number of people remortgaging, with approvals for those switching to a new deal rising to 27,045, the highest level since July 2009.
Unsecured borrowing continued to contract during the month, with people repaying around £200 million more than they borrowed.
Within the total, £5.91 billion was borrowed on credit cards, but this was more than offset by repayments of £6.28 billion, meaning overall plastic debt fell by £27 million once interest and charges were factored in.